8.27 Go to the Internet and search using the phrase “cost analysis tools.” What are some of the links and examples of cost analysis as it applies to projects?
8.28 Go to http://pmworldlibrary.net/ and type “case studies” in the search window. Select a project and report on it from the perspective of its cost estimation, budgeting, and (if applicable) expediting perspectives. Was the project a success or failure? Why?
8.29 Go to http://www.osp.gatech.edu/budget and click on “Sample Budget.” Reproduce the summary project budget worksheet. After examining the various elements in the budget, what are the main cost drivers for projects of this sort?
8.30 Go to www.stickyminds.com/articles.asp and click on “Stickyminds.com Original Articles.” Search for and click on the article by Karl Wiegers, “Estimation Safety Tips.” In the article (found as a pdf link to the site), the author offers tips on making estimates that are accurate and defensible by avoiding common mistakes. Which of these points makes the most sense to you personally? Why does it seem a plausible suggestion?
PMP CERTIFICATION SAMPLE QUESTIONS
8.31 The project administrator is preparing a preliminary budget for a project and adds in the cost of a new computer for the project team to use. What type of cost would this computer purchase represent?
d. Variable direct
8.32 The project manager for a large project being developed in northern Ontario recognizes that it will be necessary for her to maintain a close presence at the construction site during its development, and has negotiated the use of a building for her team near the construction project. The cost of the building must be factored into the project cost and will increase with use; that is, the cost of heating and other utilities is subject to change depending upon weather and team use. What type of cost would this building represent?
a. Variable direct
d. None of the above
8.33 A project budget identifies $5,000 budgeted for programming costs. The actual amount for programming costs is $5,450. Which of the following statements is correct?
a. The $450 represents a negative variance to the budget
b. There is no variance to the budget
c. The $450 represents a positive variance to the budget
d. The entire $5,450 represents a positive variance to the budget
8.34 The project planning phase is moving forward. The project team has solicited the opinions of some senior project managers with experience in similar types of projects to try and develop a cost estimate for the project. This process is an example of:
a. Activity-based budgeting
b. Contingency planning
c. Top-down budgeting
d. Cost estimation
8.35 John is putting together his budget for the project and as part of this process, he is actively discussing and soliciting estimates from each member of the project team for the overall budget. He presents his budget to senior management and Susan rejects it, stating, “Team members are always going to pad their estimates. I will give you the figure I want you to shoot for.” Susan is employing what method for project cost budgeting?
8.36 The majority of a project’s budget is expended on:
a. Project charter creation
b. Project plan development
c. Project execution
d. Project termination activities
8.37 All the following are needed for creating the project budget except:
b. Work breakdown structure
c. Activity cost estimates
d. Cost management plan
8.38 Cost estimating should occur:
a. Before the work breakdown structure is created and before the budget is developed
b. Before the work breakdown structure is created and after the budget is developed
c. After the work breakdown structure is created and before the budget is developed
d. After the work breakdown structure is developed and after the budget is developed
8.39 Any approved budget increase should be:
a. Added to the project contingency fund and only used as a last resort
b. Added to the project’s cost baseline
c. Added to the project’s lessons learned
d. Offset by budget takeaways from direct cost accounts
8.40 Cost management activities consist of all the following except:
a. Data collection
b. Cost accounting
c. Cost control
d. Account reconciliation
8.31. b—A computer purchase would be an example of a direct cost for the project.
8.32. a—The cost of using a site building varies to the degree it is used and is charged as a direct cost to the project.
8.33. c—The overrun of $450 would be referred to as a positive variance to the budget.
8.34. d—The process of asking senior project managers for their best estimates of project costs is part of the cost estimation process.
8.35. b—Susan is using a top-down method in which she, as the senior manager, is providing the project budget estimate.
8.36. c—The project life cycle teaches us that project expenditures are highest during the execution phase.
8.37. a—Deliverables do not need to be produced before the budget has been created.
8.38. c—The project cost estimates cannot be undertaken until the WBS is completed, but it then forms the basis for subsequent project budgeting.
8.39. b—The project’s cost baseline includes the originally planned budget plus all approved changes.
8.40. d—Cost management involves data collection, cost accounting processes, and cost control.